Barama fined $106M - for breaches in three concessions

http://www.stabroeknews.com/index.pl/article?id=56531605

Barama fined $106M
-for breaches in three concessions
Stabroek News, Tuesday, October 23rd 2007

Barama Company Limited has been slapped with $106M in fines for
breaches in three concessions, the Guyana Forestry Commission (GFC)
said yesterday.

Following investigations, the GFC has also dismissed two field officers
resident at the locations for "ineffective monitoring" and all three
sub-contractual operations with the three companies holding the
concessions have been immediately suspended a press release said.
However, one concession holder remains steadfast that its operations
with Barama are on the "books" and that there is no "secrecy."

On September 25, Minister of Agriculture Robert Persaud announced that
the GFC had launched an investigation into suspected cases of under
declaration of forest produce harvested, and false declarations about
the origin of forest produce harvested. This announcement followed on
the heels of a revelation in July that the GFC discovered that there
were procedural breaches with regard to the under declaration of forest
produce harvested and false declarations with respect to the origins of
forest produce involving: A Mazaharally and Sons Limited, Barakat
Tim-bers and Trading Company Limited, Barama Company Limited and N
Sukul and Sons.

When Stabroek News (SN) contacted Barama for a comment on the fine the
company had no comment at the time however, it said it would issue a
statement to the press today. The manager of Barakat Tim-bers at
Charity, Essequibo, who declined to give his name, told SN the pressure
from various letters/articles published by this newspaper on the forest
industry "help to create it (the fine)." He said the company has a
contract with Barama to log in their concession and that the GFC has a
copy of this agreement. "There is no secret deal," he argued,
reiterating that the GFC knows of the contract and has a copy. The
manager said that he knows nothing about a breach in his concession by
Barama, explaining that whatever logs are harvested at the concession;
the royalties are being paid by Barama and nothing is done in secret;
"Everything is on the books" and "in the open air." Representatives
from Mazaharally and N Sukul could not be reached yesterday for a
comment.

According to a GFC press release after investigations in September it
found that in July Barama transported a quantity of logs harvested from
ESS 10/92, issued to Barakat Timbers Limited, to Buck Hall while the
quantity of logs it declared to the GFC in July was below the harvested
amount. Additionally, the findings show that Barama harvested and
removed, without the GFC's permission, a large quantity of logs from
the concession 2/90 issued to Mazaharally. Also, the tags issued to
Barama and Barakat were used on stumps located within the concession
issued to Mazaharally.

It was also found that Barama removed a quantity of logs from WCL
05/93, issued to N. Sukul, without approval from the GFC. This, the GFC
said, is evidence of unauthorized harvesting and extraction of forest
produce. Plus, the GFC found that the "harvesting operations on the
ground were not conducted in a manner that had serious negative
environmental implications." The GFC said these findings were made
after "a detailed analysis of records was done, including a comparison
of the documentation supplied to the GFC by the companies with the
internal records of the companies." The GFC monitoring teams were also
said to have been deployed to the concession areas to quantify the
extent of the breaches, and to determine if there were additional
breaches.

The results of the investigations, "confirmed the GFC's initial
findings that there was under declaration of forest produce harvested,
as well as false declaration with respect to the origin of the logs
harvested," the release said. "In addition, it was verified that
Barama…was harvesting in the concessions areas issued to A.
Mazaharally and Sons Limited, and N. Sukul and Sons, even though the
GFC has not approved any sub-contractual arrangements for these
companies in 2007."

Sanctions

The findings were shared with the companies for written responses about
the identified breaches, under the agriculture minister's direction,
the release said. However, the submitted responses "did not adequately
address the concerns outlined by the GFC." Therefore, "The minister has
further directed that all the prescribed sanctions be imposed,
immediately," the GFC added.

The breached regulations under Section 42 of the Forests Act Chapter
67:0 include: the Evasion of Pay-ment of Royalty (Regulation 20);
Removal Permits Fourth Schedule (Regulation 21 (1); Regulation 22 (1)
and (2); Unlawful declaration of removal of Forest Produce (Regulation
23) and the Removal permit to be endorsed before sale and purchase
(Regulation 24).

The Forest Act allows for penalties through the payment of a
compensatory mechanism (Section 29 of the Forests Act Chapter 67:01,
for compensation equivalent to 35% of the market value of the produce
harvested. Based on the GFC's calculations Barama's compensation fines
are: Breach in Concession issued to A Mazaharally $78,081,800; Breach
in Concession issued to N Sukul and Sons $12, 419,244; and Breach in
Concession issued to Barakat Timbers $15,982,104.

The GFC also said it has also found that "ineffective monitoring of the
above named concession areas by two GFC field officers resident at that
location contributed to the breaches of procedures. The two field
officers that were stationed at that particular area have been
dismissed." The Commission gave assurances to all local and
international stakeholders that it is committed to ensuring that all
forest operations are conducted in a responsible manner and in
compliance with its approved guidelines and procedures. "The
effectiveness of our auditing and internal control procedures is
demonstrated by the fact that these breaches were detected at a very
early stage. We commit to further improvement on these systems, and
also to greater accountability and transparency in the execution of the
Commission's mandate working with all relevant stakeholders."

The investigation and the fine come after a months-long campaign by
civil society activists and members of the timber industry over various
issues such as illegal subletting and the export of logs. The
government stayed silent on the matter for the most part and only
recently announced the investigation. Observers have said that the
government is coming under increasing pressure over the practices of
timber companies here and it has also been surmised that the government
is aggressively pushing for local forests to be available for carbon
credits, hence the need to ensure that there are no illegal practices.

Speaking at the opening of the Commonwealth Finance Ministers meeting
here last week, President Bharrat Jagdeo said that Guyana was committed
to making almost the entire forest of the country available for the
climate change battle. It was the first time that proposal had been
announced locally and opposition parties raised concerns that there had
been no consultation between President Jagdeo and stakeholders.